Iberdrola Earnings: 2023 Guidance Raised Again After Strong Third Quarter; Shares Attractive

We don't expect to materially change our EUR 11.60 fair value estimate after no-moat Iberdrola released good nine-month results and raised its 2023 net profit growth guidance for the third time in a row. The interim dividend for 2023 is set at EUR 0.20 per share, 11% above last year and close to our 13% growth in total dividend. Our estimate implies a 5.2% yield, reflecting the attractiveness of the shares after the sector selloff driven by rising interest rates. Arguably, investors can get the same income by investing in government bonds. However, we expect average annual dividend growth of 4% by 2027 for Iberdrola covered by a similar earnings growth, both well above the sector median.